The Court of Appeal (CoA) has recently clarified the legal principles governing the validity of pre-nuptial agreements (PNAs), emphasising the critical role of full financial disclosure and the limits of party autonomy.
Facts:
The husband, Simon Entwistle, is a UK national who moved to live in Dubai in 2014. He was previously married for a brief period, although that marriage bore no children. In 2016, when he met his wife, the husband was working as a qualified accountant for PWC and earning £120,000 per annum.
The wife, Jenny Helliwell, works for her father in the family business and had not previously been married. For many years, she has suffered from serious mental health problems requiring hospitalisation for significant periods. She comes from a very wealthy family and owns assets in her sole name worth between £60m and £70m, earning approximately £650,000 per year, the majority of which is rental income from her property portfolio.
In December 2017, the parties became engaged and subsequently married on 12 July 2019. The husband left his role at PWC in January 2018 to work for one of her father's companies. However, the arrangement did not work out, and the husband left his employment in February 2019. The husband then started a new business, which ultimately failed, and he is not currently working. At the time of trial, the husband had net assets of approximately £850,000.
There is a divergence of accounts as to when the marriage failed. The wife asserts that their union came to an end in April 2022, while the husband maintains it ended in August 2022 when he moved out of the matrimonial home.
The couple entered into a PNA on their wedding day, a "drop hands" agreement that stated each party would retain their separate properties and equitably split any jointly owned property. The agreement provided for English governing law and jurisdiction.
At the heart of the dispute is whether the wife's undoubted failure to disclose the majority of her substantial wealth (£47,878,800 in business assets and property) should have the consequence that the agreement should not be upheld by the Court.
The High Court reasoned that because the husband was aware the wife was extremely wealthy, the failure to disclose the full extent of her wealth was not a fatal flaw, ultimately upholding the agreement and awarding the husband a £400,000 lump sum to meet his needs.
Decision:
The CoA allowed the appeal, the PNA was set aside, and the case was remitted to the High Court for a fresh hearing. Lady Justice King's judgement focused on the primary issue of fraudulent non-disclosure and concluded that the High Court Judge had made a fundamental error of law. The Court found that the wife’s non-disclosure was not an oversight, but rather a deliberate and fraudulent act. By failing to disclose over 70% of her assets, the wife falsified the express representation in the agreement that she had made "full and frank disclosure".
The Judge rejected the argument that the non-disclosure was immaterial. The Court reasoned that the husband was deprived of information he had been explicitly promised in the agreement, which was necessary for him to make an informed decision.
The Court found that the Judge's assessment of the husband's needs was flawed because it was heavily influenced by his decision to uphold the pre-nuptial agreement. The Judge had not properly considered the factors under Section 25 of the Matrimonial Causes Act (MCA) 1973, which is the correct legal framework for such an assessment.
Implications:
This case is a powerful reminder that full and frank financial disclosure is not merely a desirable element of a pre-nuptial agreement but is fundamental to its validity. The judgement underscores that a clause stating disclosure is "substantially complete" is ineffective if the information provided is deliberately and materially false.
This case reinforces that the principle of party autonomy, which gives weight to a couple's choice to be bound by an agreement, is not absolute. When the foundation of the agreement – full disclosure –is deliberately undermined, the Court will not uphold the agreement.
